R & D Financial Solutions et al v. Western Thrift and Loan Corp. et al
ORDER granting 165 Motion to require additional bond security pending appeal (Written Opinion). Signed by Senior Judge David S. Doty on 10/18/2011. (PJM)
UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA
Civil No. 07-4306(DSD/JJG)
R & D Financial Solutions, Inc.,
d/b/a R & D Technologies, Inc.,
a Minnesota corporation; Dan
Pullis, individually; and
Robert Maki, individually,
Western Thrift and Loan Corp.,
a Nevada corporation; Columbia
Trust Company, a Nevada
corporation and Homeowners
Lending Corp., a California
This matter is before the court upon the motion to require
additional bond security pending appeal by plaintiffs R&D Financial
Solutions, Dan Pullis and Robert Maki. On July 15, 2011, defendant
Western Thrift & Loan Corp. (Western Thrift) filed a supersedeas
bond, written by Western Bond Company (Western Bond).
See ECF No.
Plaintiffs moved to disqualify Western Bond and disallow the
bond on July 28, 2011.
See ECF No. 152.
The court denied the
See ECF No. 165.
Federal Rule of Civil Procedure 62(d) permits a stay of
payment while a case is on appeal.
The stay is effective when the
supersedeas bond is approved by the court.
See Fed. R. Civ. P.
62(d). However, “[a] creditor may always challenge the adequacy of
the bond before the district court judge.”
Phansalkar v. Anderson
Weinroth & Co., 211 F.R.D. 197, 200 (S.D.N.Y. 2002); see also
Sheldon v. Munford, Inc., 128 F.R.D. 663, 665 (N.D. Ill. 1989)
(filing a notice of appeal divests district court of jurisdiction
except for “issues relating to the enforcement of the judgment or
the supersedeas bond”).
Plaintiffs argue that Western Bond should be disqualified
because the state of Nevada suspended Western Thrift’s operational
license and issued an order limiting payment of liabilities,
because it lost underwriting insurance. See Johnson Aff. Exs. A-B.
The financial vulnerability of Western Thrift, an affiliate of
Western Bond, led A.M. Best Company to downgrade the rating of
Western Bond from B (fair) to C (weak).
See id. Ex. D.
plaintiffs argue that Western Thrift should be required to post
bond with a letter of credit from a reputable lending institution,
other than an affiliate of Western Thrift.
The purpose of Rule 62(d) is to protect judgment creditors and
ensure “that they will be compensated without additional efforts
and ... insulat[e] them from the possibility that judgment debtors
will become insolvent before the appeal is concluded.”
Mountain Custom Cycles, Inc. v. Thiessen Prods., Inc., No. 06-2527,
2008 WL 5412469, at *4 (D. Colo. Dec. 24, 2008) (citing Sheldon,
128 F.R.D. at 665).
In the present action, the security provided
by Western Thrift is no longer sufficient.
Therefore, the court
will require additional bonding from a lending institution that is
not affiliated with Western Thrift.
Accordingly, IT IS HEREBY
Plaintiffs’ motion [Doc. No. 165] is granted;
Western Thrift & Loan Corp. shall file with the Clerk of
Court either a letter of credit from a financial institution that
is not affiliated with Western Thrift & Loan Corp., or cash
equivalent in the amount of $300,000; and
immediately if Western Thrift & Loan Corp. fails to comply with
this order by November 1, 2011.
October 18, 2011
s/David S. Doty
David S. Doty, Judge
United States District Court
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